SAFECO has been active in supporting its agents through technology since the formation of its SAFECOM batch service bureau more than 30 years ago. SAFECOM, of course, evolved into AGENA, which a few years ago merged with AMS, bringing with it the AfW system. The carrier consistently plays an active role in industry automation efforts, now with the development of the ACORD XML standards, the Big I's Agents' Council for Technology (ACT), and IVANS' Transformation Station.
Over the years I've sometimes disagreed with aspects of the carrier's automation strategy (for instance, the use of proprietary terminals) but I've respected the deliberativeness and consistency of SAFECO's thought process as well as its ability to execute. Most SAFECO agents I've talked to find SAFECO to be a very good business partner. In the last year or so SAFECO has struggled with digesting American States and it hopes for great things from Mike McGavick, named CEO in January.
I had a chance recently to visit with John Carmody (AVP Corporate Marketing and Communications), Mele Fuller (Interface Architect), and Scott Bourn, (Assistant Director) at the SAFECO Tower in Seattle.
I wanted to find out about the carrier's Internet-based direct sales initiative and what that implied about its agency sales force.
I was curious about how agents could incorporate SAFECO's online customer service capabilities into their Web sites. And overall, I wanted to understand what SAFECO intends to do with the Internet and what it has learned so far.
Distributor Automation Strategy
Carriers have a variety of business strategies. Some focus on niches, some product expertise, some on operational acumen, and others on their strong distribution systems. SAFECO seems to have adopted a generalist approach, providing a wide range of insurance and financial services products its agencies can sell. It appears SAFECO intends to support the emerging strategy some agencies have adopted, namely to generate more revenue per customer by having a wider range of products and services to offer.
Given a generalist business strategy and a fairly complex corporate structure behind it, SAFECO needed some way to coordinate its technology vision with the efforts of its constituent parts. So SAFECO formed an Electronic Business Advisory Group, with representation from all sections of the company. That group approved a Distributor Automation Strategy that now serves as a shared blueprint across the company.
Though the Strategy document is confidential, Carmody shared with me some of its high level elements. The strategy has three key directions: online, centralized access to all automated agency services (the SAFECO Plaza extranet portal); single-entry of data (inter and intra-operability of data), and the use of standard technologies (e.g. the Internet and ACORD XML).
The strategy is, in turn, governed by five principles that technology solutions must satisfy: single company image/ brand across all products; single user interface available however/wherever the Internet is; improved sales and processing efficiencies; responsiveness to market changes; and re-intermediation of the independent agent.
Strategy and principles appear aimed at improving the situation for SAFECO's agents. What form has the implementation taken?
Agency services
SAFECO has been active in helping its agents connect to and make use of the Internet (SiteBuilder for Agents and Advisors). More than 600 agents have taken advantage of SiteBuilder, an agency Web site creation and hosting service. The standard sites are essentially brochures and formulaic, but custom sites are available through a SAFECO partner. A standard site costs $1,000, with an annual $300 hosting fee and $95 start-up fee. By the way, SAFECO Plaza provides a good deal of useful online background information relating to agency Web sites.
SAFECO's home page links to an agency finder that supports searches by name or location (but not telephone area code) and by type of insurance offered. The returned list provides name and address information and in some cases links. When I attempted to use the links many seemed not to work, though that could be a problem at my end. Agents can use SAFECO Plaza to establish a link between the agency finder and their Web site - a good solution to the problem of carriers keeping up with agency Web site links.
SAFECO Plaza provides information as well as entry into the SAFECO policy systems. In the past, agents connected to SAFECO's host system via SAFEDEX, using a private network. SAFEDEX is being replaced by elements of SAFECO Plaza - not a radical change for SAFECO, at least conceptually.
SAFECO Plaza works like SAFEDEX in the sense that the agent does interactive entry into the service to develop a quote, submit new business, make policy changes, and so on, and the data is downloaded overnight into the agency management system. It's a single-entry but with proprietary/single-carrier work flow.
In the past, SAFECO has chosen not to implement upload from agency systems, with the rationale that it needs to control editing and other input functions into its host system. At the same time, SAFECO provides bridge software between both Applied and AMS systems and its own software that overcomes, to some extent, problems caused for agents because of the carrier's unwillingness to allow upload directly. In the future however, the combination of the ACORD XML standards (and their extensions), IVANS' Transformation Station, and the Internet has the potential to allow SAFECO the control it needs while being part of a uniform but multi-carrier workflow in an agency.
One could imagine an environment in which an agency system communicated interactively with SAFECO Plaza through an ACORD standard XML back door. The SAFECO host would control the content, editing, and functionality. The agency side would control the presentation and integration into the agency's multi-carrier workflow. The question is, will SAFECO continue to insist on a "proprietary" presentation and workflow or will it cooperate with agencies and vendors to be part of a multi-carrier workflow?
When I asked Carmody this question, the answer I got was an in-principle "Yes," but with some caveats. From SAFECO's point of view, there's a dearth of vendors and agents that could actually use SAFECO as a remote service. And SAFECO doesn't yet have the capability of supporting real-time rating though it is at the beginning stages of an implementation process using Transformation Station.
Ultimately, over time, SAFECO intends to provide (and accept) a direct XML stream from any party without requiring Transformation Station mediation. Carmody told me, "We see real-time as the way business will ultimately be done in our industry. I describe it as NETART - Nominal Entry To Anyone Real Time." He expects SAFECO to be able to provide remote services by year-end.
As I have maintained elsewhere, one key way to drive expenses out of the insurance process is to reduce the number of steps and people involved in any process. An example is the completion of a quoting, underwriting, binding process all by the agent and all in one sitting - once-and-done. SAFECO's Virtual Producer (see below) uses SAFECO's Point of Sale Underwriting Module (POSUM) to provide a once-and-done sales process to consumers. Were that process made available to agencies and imbedded in their multi-carrier workflow, both the carrier and its agents would enjoy reduced expenses.
Selling Direct?
SAFECO sells direct to consumers through its Virtual Producer on the SAFECO Web site. What does that mean to agents? Is the carrier considering competing with and eventually abandoning its agency sales force? The word, direct from Mike McGavick, is an emphatic "No." SAFECO won't use its brand against its agents. It will, however, experiment with promising innovative distribution methods in partnership with its agents.
Is SAFECO serious about not competing? I think so. SAFECO has experimented in the past with alternative distribution arrangements. Carmody explained, "The first was with First Interstate Bank (California) in the early 80's. This is where our direct marketing technology and sophistication really got its start. A subsequent program in New York State helped refine it. New York actually gave us practical hands-on experience with the challenge of recruiting, hiring, training, and sales managing direct sales people — we learned it is hard to do." The carrier has used its experience to provide programs and consulting to thousands of agencies who are interested in direct-mail marketing.
Though SAFECO does sell direct on its Web site, those sales are not retained in house, but always attached to an agent. The agent receives a lower commission (40% of normal commission first year, 60% on renewal), but doesn't have the selling expense. The customer has an agent to turn to when desired and the agency enjoys a larger book and more occasions to cross-sell. Today, consumers can buy personal auto, term life, and securities. Homeowners and other products will be added. The online consumer has access to real time chat and a SAFECO service center.
The consumer employing the Virtual Producer has three ways to get connected to an agent: 1) using his existing SAFECO agent; 2) choosing an agent from a presented list; or 3)having SAFECO assign an agent. Once the sale is complete and the consumer assigned an agent, customer and policy information is downloaded to the agent's management system. Not a bad arrangement.
Agents can link to the Virtual Producer from their Web sites after being screened and approved by the carrier. To qualify, agencies need to have their own independent Web site and at least half the agency computers connected to the Internet (and those computers meet a minimum standard). The agents must also be willing to respond to e-mail within four business hours, have both P&C and Life appointments, and a privacy policy posted on their site.
Thus far, direct Web sales have been modest. SAFECO is finding that though consumers shop for insurance on the Web, for the most part they continue to be most comfortable buying from an agent. SAFECO is learning about the vagaries of Internet sales. It intends to find ways to use that knowledge to the benefit of its agents.
Web-based service
SAFECO provides online service direct to consumers. The services cover P&C and life insurance, annuity, and mutual fund areas. In the insurance area, policyholders can make payments and check billing history, get a policy copy or insurance ID card, change name and address, change a loan provider, and modify auto driver information. SAFECO also offers SAFECOM, a risk management information system, online. SAFECOM includes real-time claims information and analysis, workers comp first notice of loss, with state filing, and posting to an OSHA 200 log.
SAFECO's online services are laudable and may be just what some consumers are looking for. On the other hand, directing the consumer to SAFECO's site rather than the agent's may weaken the re-intermediation the carrier intends for its agents. A link from the agent's site to SAFECO's consumer service would be an improvement. And the agency's color scheme and logo carrying through into the carrier's service presentation would be even better. However, ultimately a click-through process won't be tenable.
If agents' sites end up peppered with links (for each carrier and third-party service) and each link goes to a different site (with its own login/password and look), consumers could end up frustrated and confused. Consumers need consolidated workflow, password, and look-and-feel access from agents' sites into hosted services - just as agents themselves do. With few out-facing services available to consumers from agency sites, today the problem isn't visible, but it will be as carriers and agencies do more. Ultimately both consumers and agents need a consolidating/mediating layer between themselves and the increasing richness and diversity facing them from all the Web sites they'll need to deal with to get the job done.
When I made this argument Carmody said SAFECO agrees. "We understand the point and it is well taken. We see the same problem happening down the road. Our vision through the Distributor Automation document is to accomplish the link from the agent site to SAFECO for a customer to get information is to do it through a child browser and make it appear as if the customer never left the agent's site. We think this kind of thing should be transparent to the customer and that the information is actually coming from the agency and not SAFECO."
So, in conclusion...
SAFECO's off to a fine start relative to using Internet technology to benefit its agents. It understands that its viability is dependent on the health and strength of its agents. It is aggressive about understanding and using the Web for marketing, sales, and service, and wants to do that in cooperation with its agents. The carrier believes that consumers should have multiple channels to sales and service, so they can pick and choose the one appropriate to them at the moment. SAFECO has been committed to single-entry (via download) for years as well as the various ACORD standards.
But SAFECO, perhaps justifiably, has been reluctant to embrace upload - historically necessary to provide a single agency workflow across multiple carriers. SAFECO Plaza is a perpetuation of that philosophy. However, it may be the first step in a process to provide a remote Internet service imbedded in comprehensive, multi-carrier agency workflow. And though the carrier provides online customer service and a way for agent's sites to link to it, over time the online service needs to become seamless with agency sites thereby strengthening the agency brand and providing a highly usable environment for customers.
© Copyright 2001 by Sound Internet Strategy. All rights reserved